Fixed vs variable rate mortgage
What is the difference between a fixed rate and a variable rate mortgage, and which could suit you? A plain English guide.
The choice between a fixed vs variable rate mortgage comes down to certainty versus flexibility. Neither is right for everyone, and the best choice depends on your plans and how comfortable you are with change.
Below we explain how each works. This is general information, not personal advice. Your first chat with us is free and there is no obligation.
Fixed rate mortgages
With a fixed rate, your interest rate stays the same for a set period, commonly two or five years. Your payments stay the same during that time, which makes budgeting easier.
The trade-off is that you will not benefit if rates fall, and there is usually an early repayment charge if you leave the deal early.
Variable rate mortgages
With a variable rate, your rate can go up or down. This includes tracker mortgages, which follow another rate (often the Bank of England base rate), and your lender’s standard variable rate.
Your payments can rise as well as fall. Some variable deals have lower or no early repayment charges, which can give you more flexibility.
Which should I choose?
It depends on your budget, how long you plan to stay and how you would cope if payments rose. An adviser can compare what is available and explain the costs. See our remortgage in Portsmouth and first time buyer mortgage in Portsmouth pages.
Fixed vs variable rate mortgage: your questions answered
Is a fixed rate or variable rate mortgage better?
Neither is better for everyone. Fixed gives certainty, variable gives flexibility. It depends on your circumstances.
What is a tracker mortgage?
A type of variable rate mortgage that follows another rate, usually the Bank of England base rate, plus a set amount.
What happens when my fixed rate ends?
Many lenders move you onto their standard variable rate unless you choose a new deal. It is worth looking a few months before it ends.
Can I switch from fixed to variable?
You can, but there may be an early repayment charge if you leave a fixed deal early.
Do I need to pay to speak to an adviser?
Your first chat with us is free and there is no obligation. We will explain how we are paid before you decide to go ahead.
Your first chat is free, and there's no obligation.
Tell us what you're planning. We'll tell you honestly what's possible.